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Council denies tax abatements for flood-prone SE 16th Street

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Burlington automotive company says the 3-3 vote stops their effort to open a dealership on the street

 

By Lauris Olson

AmesNewsOnline

 

(April 11, 2012 – 8 a.m.)  Deery Brothers of Burlington will not be bringing an auto dealership to Ames, the brothers said tonight following the city council’s refusal to establish tax abatement criteria along a portion of SE 16th Street.

 

Setting the criteria was the first of three actions the council would have needed to complete to allow Deery Brothers and future other businesses apply for city property tax abatements to compensate for raising their building lots in the flood prone area.

 

The Deerys had originally asked the council for a five-year abatement to bring a Chrysler, Dodge and Jeep dealership to Ames. Ames has a policy of offering partial five-year abatements or full abatements for three years. The vote on the criteria did not address abatement options.

 

Brad Deery estimated that the dealership, once completed, would yield about $180,000 yearly in property taxes and that the other two lots they planned on leasing or selling to others could provide another $350,000 a year in property taxes.

 

He also estimated that the dealership would employee 40 people at an average salary and benefits cost of $63,000.

 

He also told council members before the vote that without an abatement, the project would not happen.

 

Council member Tom Wacha responded that he was having difficulty believing that the brothers would walk away.

 

“I’m not a businessman but I find it very difficult to believe that this project would not move forward without abatement,” said Wacha.

 

“It is located in Ames by a major highway. They have done a market analysis. Look at the money the have already invested; the talks they have already had with Chrysler. I can’t believe that $100,000 to $200,000 for three years is the difference for this to not be viable. I just can’t square it my head to support abatement.”

 

After they left the council chambers, the Deery brothers repeated their assertion that without abatement, the deal was dead.

 

“That was our offer,” said Brad, the family’s spokesman. “This is what we needed for the financials to work for us.”

 

He said that his family had not finalized the purchase of the 26 acres at the southwest corner of SE 16th St. and South Dayton Road.

 

The council vote was a tie, effectively defeating a motion defining the criteria.  Jeremy Davis, Jami Larson and Peter Orazem voted ‘yes.”  Wacha, Matthew Goodman and Victoria Szopinski voted “no.”

 

Larson  focused his support on the fact that no new development had occurred along SE 16th Street  despite a $4 million infrastructure investment several years ago.

 

Orazem also mentioned the city’s expenditures to widen and pave the road. He also said the Deery Brothers plan for development, which included a 5-acre drainage pond to contain flood waters was “better than what the city might get from another, non-abated, business in the future,

 

Wacha reminded the other council members that he has said repeatedly that it is the responsibility of businesses on South Duff Avenue, another area in the Skunk River flood plain, to adjust their business plans to take the risk of flooding into account, not the city’s.

 

During deliberations, Szopinski sounded like she might be voting “yes.

 

“I feel that I need to say that I came up with a list of pros and cons.  My con list was very much fueled by my philosophy that I do not want to encourage crony capitalism and winner take all politics that I believe exists in Ames and through out America.”

 

Goodman has voiced his opposition since the Deery request first came before the council, emphasizing his belief that tax abatements put the city in the position “of picking winners and losers.

 

“[A resident] said earlier tonight that he was astounded that someone would want to put a business in a flood plain. I wish I was astounded that human beings that share our space who are very successful and talented would ask for help they possibly don’t need.

 

“I have been running businesses for decades. I have asked for loans from banks and family and friends, but I have never come to government saying  ‘This isn’t working for me. I know that every one else in the community who does what I do is making it without government help but I want some help.’ I don’t think that is fair … I don’t think it is government’s responsibility to recruit new retail businesses to compete against existing retail businesses.”

A Fair Level Field for All

In a time when many are calling for less government and smaller government it is amazing that three city council members want more government involvement in capital investment in Ames.The three who voted Yes to give away tax benefits to bring a business into Ames to compete head on with existing established local business must want more government involvement. They must not be in favor of the market establishing sucess or failure. Giving away taxes means that ALL of us who pay taxes are saying we want this business and not the ones who are already here and got NO tax advantage. Also a quick look at the near flood plain reveals that this is a lousy place to build anything. It was ALL underwater during the last flood and there will be more floods. The three that voted No are trying to be FAIR to all of us and they deserve a big Thank You.

re

The old Benson motors building sits there and ready for a car dealership...why build in a flood plain?!?

Common Sence

Bingo! Why build new buildings when existing ones are going un-used. The Benson site has to be at least 2-3 acres in size. Council should be encouraging the use of the Benson building, yet I have not seen any of them bring that option up!

Giving Away Taxes?

Right now we collect almost nothing in taxes from the property in question, and the land provides no economic benefit to the taxpayers of Ames. Until some improvements are made we will continue to collect almost nothing. All taxpayers would benefit if the City provides some inducement to make improvements that include a short-term deferal of taxes. You can't "give away" what you don't have and right now we don't have property revenue from improved property in this location - given the recent action by council we can expect we will continue to not collect property taxes from this area - we will have the same costs for schools, police, fire, library, parks, etc. - but we will not share that cost with the Deery brothers. Every Ames resident who owns or wants to own a AMERICAN made Chrysler product with need to go out of town to buy or get dealer service done - and while they are there they might as well do some other shopping - maybe even buy a burrito.

Great, looks like we're back

Great, looks like we're back to old tricks in Ames. Matthew Goodman is no businessman. Deleted as it assumes information not in the public arena.

Insults

People who know they are wrong resort to insults.

People who know they are

People who know they are right tell the truth.

Did I hurt your feelings

Deleted for childishness and failing to contibute to the conversation in any relevant fashion. To the poster of this comment and the previous one that had to be edited. This comment section does not exist to host comments such these you have recently posted.Please refrain from further postings on AmesNewsOnline.

Lauris Olson, Publisher

Great victory for common sense

The failure of Orazem's motion to give tax breaks for building in the flood plain is a great victory for common sense. It is up to individual businesses, along with their insurers, to determine where, how and what they ought to build. City council ought to stay out of it, and they have rightly done so. I am sure there are existing business owners in that flood-prone area who were very much opposed because they don't want a business with subsidized elevation pushing more water in their direction. These guys are of course afraid to speak up because they don't want to get cross-wise with the powerful Ames Economic Development Council. Once again, the AEDC proves they are willing to roll over (perhaps I should say drown) any existing business just to try and attract a new one, and they want to do it all at public expense. Shame on them. Bravo council members Goodman, Szopinski and Wacha!

"American made Chrysler"

People should look in town as well as out of town for major purchases such as vehicles.

As for south 16th street, bravo to the three council members who said "no" to building on the flood plain. The small amount of taxes brought in doesn't begin to compensate for the damage that flooding costs.

The other issue here is the favoritism and cronyism (Szopinski's statement was right on the mark)that Ames exhibits to such an extent that allowing certain individuals to do whatever they want and wherever they want in the name of "free market" has become a twisted morality for some.

Thanks to those who voted no to this. I'm sure Ames will survive without the Deery's.

Is Surviving Our Only Goal?

Ames survived for many years with little but Iowa State University, the DOT, and USDA and business closely associated with these. If our only goal is to survive, Ames could survive with no additional growth and nothing but these entities. If as a community we would rather thrive than just survive we need to be a little more open to business expansion. Where are the "non-crony" capitalists coming forward with improvements? Where are the "smart-growth" advocates with a "smart-growth" development? The fact is they do not and will not bring anything to the table and never will. And no, the government has not provided assistance to the food business and it's associated low paying jobs but in some cases we need to provide some incentives for businesses that provide a living wage, and this is such a case.

to above

No, surviving isn't our only goal. Our main goal should be good quality of life for all and the attitude of the Ames Economic Development Commission and their influence has caused decisions that have hurt neighborhoods and the environment. The AEDC makes decisions that benefit the few at the expense of the majority.

To attain this goal, Ames citizens need to pay attention to what's going on around them and speak up when needed.

Ames needs to study what other communities have done to create quality of life for all.

A car dealership will not add to the long term health of Ames, especially when the aedc members(except Wacha) seem to base many decisions on the desire to "scratch" someone's back.

AEDC

Please name one decision made by the AEDC that has hurt neighborhoods and the environment.

One...

Their decision to support McFarland Clinic's recent expansion.

Two

The AEDC backing of the Wolford failure which caused a decade of grief and produced nothing.

Three

The AEDC's backing of the overgrowth of apartments in the south west part of Ames.

wrong

you're quite wrong. The expansion was needed. Job security. I support a business that employees so many individuals. It keeps this town going as well as provide great health care.

Job Security?

So apartments are overbuilt to the extent that half or more remain empty so that apartment managers can retain jobs? That is completely lame.

No wonder we're in the state we're in.

Empty?

There aren't very many empty apartments in West Ames, and with ISU enrollment continueing to rise I don't see there being many in the future either. There is a reason there are apartments going up all over Ames, more students.

So Many Speak Up, So Few Pay Up

There is no residential neighborhood in the area proposed for development. The developer proposed retaining more water than they will displace. People will continue to have cars, they will just need to drive somewhere else to have options, and our neighborhoods will have less tax revenue to fund quality of life for all.

Back Scratching?

Wacha's back has already been scratched, he just does not want to return the favor? Would his job with Webfilings be here if not for tax abatement?

We needn't bribe to thrive

If there is unmet demand for automobile sales in Ames, then somebody will enter or grow their presence in the market to supply that demand. If not, I see no value to Ames in subsidizing a new player to the detriment of all the existing ones. I am surprised that only the "liberal" council members could see this.

John Hascall

How dare you

How dare you suggest an open and free market in Ames or any other place in America. Our country was built on the principle that.........I mean........wait.......never mind.

confused

At the time South 16th Stree was paved, I thought the stated reason was to improve access to town for the people staying in the motels out by Dayton, especially during heavy-traffic events like football gamse. It seemed a rather expensive solution to the problem, but I could understand the reasoning.

I must have missed the part about how the road was paved to encourage development in an area that was mostly under water during the last flood(!!!) Just look east from the intersection of South Duff and SE 16th, from which SE 16th looks like a valley next to the river, and the flooding potential is obvious. You don't need a flood-plain map.

And per a previous comment, land that holds flood water provides a VERY valuable service, even if it doesn't provide a lot of tax revenue. Road shoulders provide a valuable service even if you can't ordinarily drive on them. Kidneys provide a valuable service even if you can't think with them. Until we accept and embrace the truth that the flood plain is part of the river, we'll continue to make dumb decisions that cause serious problems for future residents and taxpayers.

Three cheers for Cedar Falls, the town that finally put an end to the craziness and realized that the flood plain is for flooding.

The Citizen

I think most of us are positively impressed with the votes of City Council members Wacha, Szopinski, and Goodman on this issue. A courageous stand and the right thing to do.

to "The Citizen"

I agree.

all winners

TIFF districts, urban renewal districts, historic renovation tax credits and tax abatement were all designed to improve communities for the well being and benefit of all. The concept is to encourage at risk investment that would otherwise be too risky or motivated to locate in other communities. I would prefer that tax abatement not be for a specific business proposal, but rather a targeted area where there is agreement that the area needs improvement or has financial impediments not common to the rest of the community.

It is a Matter of Definition

Urban renewal districts are by definiton URBAN ie existing urban areas NOT FLOOD PLains.

Wacha and Webfilings

Wacha can't square in his head why this Iowa based company needs an incentive to locate here in Ames, though if you look around it is not hard to determine that there are not really alternative sites that are suitable (and not the old Benson Motors is not suitable for a modern car dealership). I'm wondering if Wacha has any trouble squaring in his head that his own company (California based Webfilings) has received huge government incentives from the State of Iowa and property tax abatement from the City. In addition their new facillity is on government subsidized land at the ISU Research park. Wacha did not work for Webfilings until after he was elected to Council, and the incentives came after that. Prior to Webfilings, Wacha worked for Quality Attributes Software - another recepient of large amounts of state economic development assistance. I am glad Webfilings located here in Ames, and that we had state and local incentives in place to get them here (though I don't think we collect sales tax on the service they sell). I just wish we could have offered a little bit of assistance to the Deery brothers.

Good econmic developement

Good economic development incentives increase the community's exports. Webfilings provides virtually all of it's services outside of Ames. Thus giving a greater bang for our incentive dollar.

Bad economic development incentives replace already existing services. The return for the incentive dollar is very small when replacing existing services.

Combine that with incentivizing flood plain development -- Wacha vote was a good one.

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